By Ashutosh Deshmukh and Jeffrey Romine

A business’ accounting software can provide real-time support for the creation of web-based storefronts and electronic data interchange. Real-time connectivity with the accounting system can enhance forecasting, scheduling, manufacturing, and procurement functions. Changes to inventory or pricing can be made instantaneously. The back-end systems can check and approve credit for new customers, or support an online service that does so.

Customer relationship management (CRM) is an increasingly popular software solution for large or midsize companies. CRM manages prospective and existing customer data, coordinates marketing channels, and integrates customer support functions with back-end office systems. The analytical capabilities of CRM support can identify profitable customers, products, and regions; conduct life-cycle analysis on customers; identify productive salespersons; and provide sophisticated sales forecasting abilities. In addition, CRM software may come with data mining tools that can analyze past customer behavior, predict future customer behavior, and identify cost-effective marketing strategies.

Connecting members of the sales force to the CRM system enables them to check the status and pricing of products, view customer contracts, and conduct analysis.

Clickstream analysis is another aspect of CRM. A website’s log file captures information about a visitor that can be used to evaluate website performance, identify new visitors, and correlate this data with order and marketing promotions. Various vendors offer clickstream analysis tools as an integrated part of the accounting software.

Some CRM tools provide self-service for customers as part of the accounting software. Customers should be able to establish a personalized online account, enter and track orders, create a customized product, and issue special instructions. These features eliminate routine queries while empowering customers. Customers should be able to track service requests, explore company knowledge bases, establish online user forums, and access online technical support.

The billing and collection abilities of accounting software are an integral part of its e-commerce features. The software should be able to present the bill electronically through the website, e-mail, faxing, remote printing, or a third-party portal. The software should also include billing options, such as discounts based on amount, time, or location; calculation of taxes; automated late-payment charges; and cycle billing.

The payment mechanisms in business-to-customer (B2C) and business-to-business (B2B) e-commerce include credit cards, debit cards, electronic cash, and electronic checks. B2B commerce can include more complicated payment mechanisms, such as electronic fund transfer (EFT), letters of credit, and bills of exchange. The software should be able to accept common forms of electronic payment and post them into the accounting system.

Acquisition Cycle

Electronic Data Interchange (EDI) involves the exchange of business documents generated by the acquisition cycle in a standardized electronic format between computers. EDI translators take the incoming documents and produce reports that are then manually processed. The translators can also take outgoing documents and submit the information to the trading partner. Third-party EDI providers develop the software and interface it with the existing accounting system. An integrated EDI solution is generally developed as part of the accounting system. Whichever EDI solution is chosen should handle applicable standards and meet industry-specific standards.

Another emerging area is e-procurement, which utilizes the Internet for purchasing expenses such as maintenance, repairs and operating purchases, office expenses, and travel expenses.

Accounting software may also provide workflow technology that automates the procurement process, including the capability to generate purchase orders, accept advance shipment notices from suppliers upon fulfillment, and post shipment notices at the accounts payable level.

An electronic catalog of products from approved suppliers can enable self-service purchasing by employees. Geographically dispersed employees can browse web-based catalogs from their desktops and make purchases. Accounting software should support various catalog development options and hosting facilities.

Electronic marketplaces are places where a large number of buyers and sellers connect with each other. Manufacturers, suppliers, financial institutions, and shoppers can exchange information concerning forecasts, inventory, billing, and product design in real time. Although creating and maintaining electronic marketplaces is not a function of accounting software, some vendors provide tools to create and host them. The primary concern should be how the back-end accounting system is connected with the electronic marketplaces, how the data is delivered to an employee’s desktop, and how the transaction is processed through the accounting system.

Accounting software can contain self-service abilities for vendors. Vendors can access their own information about requests for quotations or proposals, view or revise their purchase orders, investigate the receipt or return of goods, and obtain payment histories. Inventory requirements, information about expected performance and quality of products, and scheduling information should also be accessible to vendors.

Accounting software should support online submission of expense reports, particularly travel and entertainment expenses. The software should include the following features:

If procurement cards are used, the accounting software should be able to automate transactions. The accounting software should interface with any third-party tool that is used.

Financial Reporting

Accounting software should be able to provide web-ready reports formatted in HTML. More advanced XML and XBRL capabilities are becoming more popular. Accounting software should also support ad hoc report generation via web queries. Useful features include support for global tax requirements, multiple exchange rates and conversion methods, and the ability to translate into other languages.

Integration of Features into Software

The Exhibit shows information collected from websites and surveys relevant to the e-commerce features of products from seven accounting software companies. Most of the e-commerce features are available in the company’s flagship products, and to a lesser degrees in their other products. These companies and products were selected for illustrative purposes only.

Different vendors use different terminology to describe e-commerce features. For example, Macola’s web storefront has two components: commerce connector and fourth channel catalog, both of which can be used to create different kinds of B2B and B2C web storefronts. Sage Enterprises offers these capabilities through authorized developers. Great Plains has a tool called eSell that helps small and midsize businesses establish and manage web storefronts. The tool used to build web storefronts, in most of the cases, offers CRM, sales orders, and self-service-customer capabilities. Lawson Software offers a tool kit called E-commerce Extensions that can be used to build websites and integrate them with a back-end accounting system. Lawson has partnered with Siebel to provide integrated CRM tools. These tools provide most of the revenue cycle functions in the Exhibit.

The existence of a tool does not mean that a company offers all e-commerce functions, but it at least offers some functions or may offer additional functions not listed in the Exhibit. Detailed surveys are available from the authors. Features of accounting software are constantly changing; users are advised to seek out the most current information available and be cautious before buying.

J.D. Edwards, Oracle, and SAP are enterprise resource planning (ERP) vendors and provide a complete range of homegrown or third-party-partner modules that cover all facets of e-commerce. These vendors also provide sophisticated CRM, supply chain management, human resources management, and reporting tools. Additionally, support for portals, exchanges, and travel centers is available. Each vendor also offers websites that enable collaborative business environments and expand the capabilities of the ERP software.

Most vendors (including the seven shown) also offer security features such as encryption, firewalls, and support for public key infrastructure (PKI).